Call it a “lottery ticket” if you’d like — I don’t mind. Folks who invest in mining company Northern Dynasty Minerals (NYSEAMERICAN:NAK) generally know that holding NAK stock involves risks … or at least, they should know this.
However, big risks can be associated with greater potential rewards. Northern Dynasty Minerals isn’t for the faint of heart, but the shares are dirt-cheap and capable of shooting very high, very quickly.
As we’ll soon see, NAK stock is much closer to its 52-week low than its 52-week high. This suggests the possibility of a bargain buy, and the next rally could be just around the corner.
So, are you ready to drill deep for what could be a market gold mine? If so, then put your hard hat on as we delve into the ups and downs of a stock that’s not loved by everybody, but won’t bore anybody.
NAK Stock at a Glance
I alluded to NAK stock’s 52-week range earlier, so I’ll be more specific now. Currently, that range is between 31 cents and $2.49.
It reached its peak during the summer of 2020. The run-up was amazing to behold. Generally, though, I don’t recommend chasing after steep rallies — and in this instance, the chasers got punished.
By the end of 2020, NAK stock was down to 32 cents — very close to the bottom of its range. Yet, there was another rally in February 2021 as the stock hurtled up to $1.
As of May 11, the shares were trading at 55 cents. The market has witnessed the stock go lower than that, but it has also gone much higher.
I’ll put it to you this way: NAK stock has nearly gone to $2.50 while Northern Dynasty’s primary project wasn’t operational.
Consider how high the stock could go if that project is permitted to operate. It would be an amazing day for the shareholders, to say the least.
One Project, Many Minerals
Borrowing a few fast facts from InvestorPlace contributor Muslim Farooque, we can get a quick snapshot of Northern Dynasty’s main asset, the Pebble Project:
- Located in Southwest Alaska, the mine is a gold, copper, porphyry and molybdenum mineral deposit.
- Northern Dynasty asserts that the Pebble Project is one of the largest copper-gold mines in American history.
- The numbers seem to support this grand claim. It’s estimated that the Pebble Project has a whopping 57 billion pounds of copper, 71 million ounces of gold, 300+ million ounces of silver and 3.4 billion pounds of molybdenum.
So, that’s the good news. The issue here is that the Pebble Project happens to be located near Bristol Bay in Alaska, in an environmentally sensitive area.
Northern Dynasty is waiting for a green light from the Environmental Protection Agency to drill for all of those minerals.
Good for the Green Economy?
Somehow, the company would need to convince regulators that developing the site could offer benefits to the environment. Or at least, those benefits should outweigh the harm that the Pebble Project might bring.
Can it be done?
The answer is: definitely maybe. In the company’s investor presentation, Northern Dynasty builds a strong case in favor of copper as an essential mineral for the green economy.
As you may already know, copper is commonly used in wind turbines, smart grids and electric vehicles.
Moreover, in July 2020, a number of federal agencies — including the U.S. Environmental Protection Agency — conducted an intensive review of the Pebble Project.
According to Northern Dynasty, that review “found the proposed mine would not have a measureable impact on local fish populations or the commercial, subsistence and sport fisheries that depend on them.” Plus, it evidently “would make a significant socioeconomic contribution to the region, the state and the country.”
So maybe drilling at the Pebble Project could be net-positive for the environment in the long run.
NAK stock involves risks, so please don’t pour your entire portfolio into this one stock.
It could be worthy of a moderately sized position, though. After all, Northern Dynasty is sitting on a whole lot of minerals.
If the company can just get permission to drill, the shareholders will surely benefit — and maybe the environment will, too.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
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